1.1
The Joint Committee of Public Accounts and Audit (JCPAA) inquiry into the Commonwealth performance framework was based on the following Auditor-General reports:
No. 58 (2016-17), Implementation of the Annual Performance Statements Requirements 2015-16
No. 6 (2016-17), Corporate Planning in the Australian Public Sector
No. 31 (2015-16), Administration of Higher Education Loan Program Debt and Repayments
1.2
By taking a thematic approach to some of its Commonwealth public sector inquiries, the Committee seeks to encourage improvements and shared learning in key areas of public administration. The inclusion of Audit Report No. 31 within the scope of the Committee’s inquiry provided an opportunity to examine issues relevant to Commonwealth performance reporting at the program delivery level. The Committee also briefly considered Audit Report No. 54 (2016-17), Corporate Planning in the Australian Public Sector 2016-17.
1.3
The Commonwealth performance framework is established under the Public Governance, Performance and Accountability Act 2013 (PGPA Act) and the accompanying PGPA Rule 2014. The framework requires Commonwealth entities to produce corporate plans, Portfolio Budget Statements, annual reports and annual performance statements.
1.4
Improving the Commonwealth performance framework, to ensure line of sight between the use of public resources and the outcomes achieved by Commonwealth entities, has been a long-term focus of the JCPAA. In JCPAA Report 453, Development of the Commonwealth Performance Framework, the Committee made the following observations relevant to this inquiry:
the importance of a ‘clear read’ of performance information—with performance information being presented clearly and consistently throughout all relevant reports produced by a Commonwealth entity within the annual reporting cycle, and across annual reporting cycles
the importance of establishing clear criteria (such as relevance, reliability and completeness) that performance information should satisfy
the importance of strong and sustained leadership at all levels, including senior leadership teams within entities, to ensure the effectiveness of the new performance reporting framework
the importance of establishing effective performance monitoring, reporting and evaluation regimes for improved accountability
1.5
In the current inquiry, the Committee was strongly of the view that, to build on momentum in the implementation of the Commonwealth performance framework, the provisions of the PGPA Act need to be amended to require the Auditor-General to conduct annual audits of performance statements. Mandatory audits will provide the necessary incentive in the system to ensure the quality of that reporting is of the required standard. The Parliament and the Australian public would then receive the same assurance on non-financial performance reporting as on financial reporting, where an independent audit is mandatory.
1.6
A key Committee recommendation in this report is therefore that the Australian Government amend the PGPA Act to enable mandatory annual audits of performance statements by the Auditor-General, with Commonwealth entities to be consulted on the implementation timeframe.
1.7
The Committee acknowledges the Auditor-General’s observation that moving towards a mandatory system similar to financial auditing will take time, to enable entities to build capability, and establish effective systems and processes. The Committee seeks to establish the framework, including through amendment of the relevant legislation, to enable this transition process to commence. The Committee believes that taking this action now is critical to implementing an effective Commonwealth performance framework for the future.
1.8
The Committee supports the Auditor-General’s position that, in the interim, the Australian National Audit Office (ANAO) should continue to build on its audit methodology in this area such that the ANAO is positioned to be able to audit the annual performance statements of Commonwealth entities in a similar way to the audit of financial statements, when required to do so. Pending this requirement, the ANAO would continue to consider entities’ implementation of the PGPA Act through its annual work program.
1.9
The Committee has also recommended action on the following matters, as set out in Chapters 2 and 3:
that the ANAO consider conducting an audit of one complete Commonwealth performance reporting cycle
that the four audited Commonwealth entities from Audit Report No. 54 report back to the Committee on how their senior management teams are working to further embed the corporate planning requirements in future cycles
that the Australian Government amend the PGPA Rule and guidance to clarify the functions and charter of entity audit committees, to reflect their role in assurance of the appropriateness of performance reporting
that the Department of Finance (Finance) Finance undertake a more comprehensive monitoring and evaluation program for the ongoing implementation of the Commonwealth performance framework
that the Department of Education and Training conduct a review on whether non-financial performance reporting and evaluation requires strengthening as a training and research discipline, with relevant lead agencies to report back to the Committee on progress in developing capacity training in this area for Commonwealth entities
that Finance report back to the Committee on its project management arrangements for implementation by Commonwealth entities of a more mature approach to risk management and ‘joined up’ government
1.10
The Independent Review of the PGPA Act, in progress at the time of the Committee tabling its report, will also cover a range of matters relevant to the Committee’s inquiry. The Committee has made some recommendations for the attention of the review, but the Committee’s primary focus will be to monitor implementation of the review recommendations by Finance and other agencies, noting also that the review’s comprehensive terms of reference were developed in consultation with the JCPAA.
1.11
In Chapter 4, the Committee concluded that the Department of Education and Training had developed some initial performance measures for the Higher Education Loan Program (HELP) but could improve its performance reporting by including measures of program sustainability. The Committee also strongly endorsed the ANAO finding that the department and the Australian Taxation Office (ATO) should broaden the range of HELP information reported publicly, making a recommendation on this matter. The Committee noted advice that, following legislative changes allowing the sharing of tax file numbers with the ATO, the department is building a longitudinal database to better support evaluation, analysis and policy, and that new data exchange software will resolve some key administrative capability issues. The Committee further noted advice that both entities were developing a joint risk-based compliance and enforcement strategy for the program, in response to the audit recommendation on this matter.